You’ve been hearing about the major players in the privatization game for more than a year.
States like Indiana and cities like Chicago relinquished control of existing infrastructure to private investors.
A term you may hear more these days is “brown field.” That describes the lease or sale of existing infrastructure. Technically, a brown field project involves a piece of underused ground or infrastructure that someone assumes control of to make future investments.
At press time, state legislatures in Pennsylvania and New Jersey were taking legislative steps to join the growing list of states interested in brown field proposals.
Pennsylvania Gov. Ed Rendell is still itching to lease the Pennsylvania Turnpike to private investors. While in New Jersey, Gov. Jon Corzine – still recovering from a car wreck – has talked about leasing the New Jersey Turnpike and Garden State Expressway.
New Jersey transportation officials were, at last check, still working on putting a brown field proposal together.
Another aspect of privatization is the “green field” concept. Those projects are brand-new roads or the addition of lanes where they did not exist before. These projects require the acquisition of right of way.
The biggest green field proposal in the news these days is the Trans-Texas Corridor – 4,000 miles of toll roads, railways and utility lines throughout the state, including truck and toll routes from the Mexican border north to Oklahoma.
Texas also has numerous other private toll roads in the works in the green field category.
Lawmakers in Mississippi recently joined the green field club by passing legislation to allow tolling to pay for new roads, while similar legislation is pending in Tennessee.
Nearly half the states in the union and U.S. territory Puerto Rico are authorized to use private-sector funding for highways according to the Federal Highway Administration. That’s quite a jump from August 2005 when there were only seven states on the list.
The Owner-Operator Independent Drivers Association opposes brown field projects because tax money has already paid for the existing infrastructure.
OOIDA officials are not categorically opposed to green field proposals.
However, there are certain circumstances. High toll rates and foreign ownership of the roads does and will always raise red flags. Those are two big reasons why OOIDA officials strongly oppose the Trans-Texas Corridor.
Association officials would insist that tolls on a green field project go strictly toward the project and be removed once paid for.
to toll, privatize
Mississippi Gov. Haley Barbour signed a bill in April authorizing tolls to pay for new roads. Tolls are to be retired when that project is completed.
The new law authorizes the Mississippi Department of Transportation to contract with private industry to construct green field projects. Previously, state law prohibited toll roads.
The new law mandates alternate free routes remain available for drivers who choose to avoid tolls.
OOIDA Executive Vice President Todd Spencer says Mississippi is a candidate where, theoretically, a green field toll project could work. However, he says the state should proceed with caution.
“On its surface, it certainly could be on the up and up,” Spencer said. “We still would look at this with grave caution simply because the history of toll facilities across America is that these are unkept promises. These are commitments that have a way of disappearing with time.”
Texas audit: same song,
The Texas state auditor recently concluded that transportation officials used inflated numbers to report an $86 billion funding gap for highways and transportation projects.
The audit released April 30 has a familiar ring to it because it is the second scathing review of transportation funding estimates this year.
State Auditor John Keel said the $86 billion estimate by Texas Department of Transportation officials should be more like $77.4 billion. The auditor said nearly $38 billion of that estimate took into account undocumented cost estimates from city officials competing for shared transportation funding.
Keel’s team of auditors said TxDOT’s formula “may not be reliable for making policy or funding decisions.”
TxDOT Executive Director Michael Behrens responded by saying the audit was proof of a large funding gap, even if the formula was flawed.
“No matter what number you choose, Texas has a big problem: More people, in more cars, driving more miles on an already congested highway system.”
Back in February, Keel’s office was critical of TxDOT’s cost estimates associated with the 4,000-mile Trans-Texas Corridor network of toll roads and infrastructure.
Transportation officials had estimated in 2005 that the proposed corridor would cost about $183 billion. Auditors determined that one segment alone – the TTC-35, comprising about 14 percent of the proposed network – would cost $105.6 billion.
Mexican toll road in shambles
Proponents of highway privatization use efficiency as one of their supporting arguments. But, try selling that to motorists and truck drivers in Mexico, who pay up to $70 U.S. for a round trip on a former private toll road filled with potholes, and now run by the government.
The 163-mile, privately built Sun Highway – Autopista del Sol in Spanish – is a “cavalry of cracks, potholes and risks,” according to a recent Mexican newspaper report.
The private road operator reportedly walked away from the lease deal prematurely, leaving the government responsible for $60 million in repairs.
Privatization supporters such as Robert Poole of the Reason Foundation said they believe the Sun Highway contract contained faults. The private contractor made a profit quickly and left the deal early, relinquishing control back to the government without shouldering any responsibility for upgrades.
President Felipe Calderon still believes privatization is the way to go. He recently announced a proposal to increase revenue from tolls by converting 16 freeways into government-run or private toll roads and contracting with private companies to build and operate 24 additional toll roads.
Privatization opponents fear that is a slippery slope.
“What happened there was an example of what can go wrong,” OOIDA’s Spencer said. “It tells me that the price was so high on those roads that people wouldn’t use them and they weren’t maintained.”
Spencer said the Mexican toll road debacle is “a classic example of profiteering” while the needs of the public have not been met.
“It was a short-sighted, quick-buck motivation from the start,” Spencer said.